NOTE 15. SUBSEQUENT EVENTS

The Company reviewed all subsequent events and transactions that have occurred after March 31, 2020, the date of the consolidated balance sheet.

COVID-19 PANDEMIC

In March 2020, the agency of the United Nations, responsible for international public health, declared the outbreak of the COVID-19 Pandemic, which has spread throughout the United States. The spread of the COVID-19 Pandemic has caused significant volatility in the U.S. and international markets and, in many industries, business activity has virtually shut down entirely. There is significant uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies. As a result, the Company is not yet able to determine the full impact of the COVID-19 Pandemic on its operations and therefore, the potential as to whether or not such impact will be material.

Our results of operations and cash flows for the three months ended March 31, 2020 were not materially impacted by the COVID-19 Pandemic. An assessment of the current or identifiable potential financial and operational impacts on the Company subsequent to March 31, 2020 as a result of the COVID-19 Pandemic are as follows:

Of the 29 income properties in the Company’s portfolio, 24 properties have remained open since the onset of the COVID-19 Pandemic, with 11 of those properties operating on a limited basis. The 24 properties represent approximately 78% of our annualized base rent.

The Company was contacted by certain of its tenants who are seeking rent relief through possible deferrals or other potential modifications of lease terms, beginning with the April 2020 rent. Tenants seeking rent relief for April 2020 represented approximately 38% of the Company’s annualized base rent as of March 31, 2020. Of the tenants that have not paid rent for April 2020, approximately 34%, representing approximately 13% of the Company’s total April rent, have reached an agreement on either a deferral arrangement or other accommodation. In all instances, the Company is not relinquishing any of its contractual rights under its lease agreements.

The Company believes certain of the programs available under the CARES Act may provide tenants with the ability to obtain proceeds from loans provided by the federal government which could provide liquidity that would allow the tenant to pay its near-term rent. However, no assurances can be given that the tenants will seek to access or will receive funds from these programs or will be able to use the proceeds to pay their rent in the near-term or otherwise.

When the pandemic was declared, given the uncertainties created by the COVID-19 Pandemic and the impact on the capital markets, the U.S. economy, and PINE’s tenants, the Company temporarily suspended its activities directed at identifying additional acquisition opportunities. In connection with that decision, the Company believed it prudent and necessary to withdraw its previously provided guidance for the full year of 2020, including its targeted level of acquisitions totaling up to $120 million. The Company has not provided any updated guidance. The Company notes, however, that depending upon the duration and severity of the COVID-19 Pandemic, the Company could ultimately reach the targeted level of acquisitions in 2020, although no assurances can be made regarding the likelihood or timing of attaining that level of acquisitions, and should such targets be reached, the timing of such would have an applicable impact on full year results of operations, and the related performance measurements of FFO and AFFO.

Given uncertainty surrounding the depth, duration, and geographic impact of the COVID-19 Pandemic, as a precautionary measure intended to support the Company’s liquidity, the Company, in March 2020, drew $20 million of available capacity on its $100 million senior unsecured revolving Credit Facility. As a result, the Company, as of March 31, 2020, has approximately $22 million in cash on hand with approximately $57 million outstanding on the Credit Facility. Just prior to the $20 million in draws in March 2020, the Company had approximately $2 million in cash, as approximately $10.3 million of the $12.3 million in cash as of December 31, 2019 had been utilized for both general corporate and working capital purposes, as well as property acquisitions subsequent to December 31, 2019.

The total borrowing capacity on the Credit Facility, based on the assets currently in the borrowing base, is approximately $87 million, and as such the Company has the ability to draw an additional $30 million on the Credit Facility. Subsequent to March 31, 2020, if we were to add the first quarter 2020 acquisitions to the borrowing base, we anticipate that the total borrowing base will increase the borrowing capacity to the $100 million commitment on the Credit Facility. Pursuant to the terms of the Credit Facility, any property in the borrowing base with a tenant that is more than 60 days past due on its contractual rent obligations would be automatically removed from the borrowing base and the Company’s borrowing capacity would be reduced. The Company believes that where the Company and its tenants have agreed to lease modifications pertaining to rent, such as the deferral of current rent to be paid later in 2020, under the terms of the Credit Facility, such tenant would not be past due on its rental obligation if it adheres to such modification, and thus any of the Company’s applicable properties would not be required to be removed from the borrowing base.

As a result of the outbreak of the COVID-19 Pandemic, the federal government and the State of Florida issued orders encouraging everyone to remain at their residence and not go into work. In response to these orders and in the best interest of our Manager’s employees and our directors, our Manager implemented significant preventative measures to ensure the health and safety of its employees and our Board, including: i) conducting all meetings of our Board and Committees of the Board telephonically or via a visual conferencing service, permitting its employees to work from home at their election, enforcement of appropriate social distancing practices in our Manager’s office, encouraging its employees to wash their hands often and providing hand sanitizer throughout their office, requiring its employees who do not feel well, in any capacity, to stay at home, and requiring all third-party delivery services (e.g. mail, food delivery, etc.) to complete their service outside the front door of its offices.

INTEREST RATE SWAP

In April of 2020, the Company executed a five-year interest rate swap agreement whereby, effective as of April 30, 2020, LIBOR was fixed at 0.48% for approximately $50 million of the outstanding balance on the Company’s revolving Credit Facility. As a result of the interest rate swap, $50 million of the Company’s long-term debt has a fixed interest rate ranging from 1.83% up to 2.43%, based on the Company’s leverage as a percent of total asset value, as defined in the Credit Facility agreement.

SHARE REPURCHASES

For the period subsequent to March 31, 2020, through May 6, 2020, the Company has repurchased approximately 311,000 shares of our common stock for approximately $3.4 million, an average purchase price of $10.96 per share, under the $5 Million Repurchase Program. As a result, approximately $1 million of the $5 Million Repurchase Program remains as of May 6, 2020.

There were no other reportable subsequent events or transactions.